“Promises, Promises,” is a long-running Broadway production. The title song speaks of alibis and dashed promises and yet other promises that bring joy and hope and love. Promises in commercial real estate mean nothing unless they are in writing in official “request for proposal” and “contract” format.
Don’t trust anything written on a cocktail napkin. When you go from request to proposal to lease, leave an official paper trail.
To be sure, some misinterpretations could arise from a written proposal, but the chances are less likely than what is discussed verbally or in an email.
Some brokers want the quickest, easiest path to closure. They will respond to texted requests with three or four lines in an email. Read closely. They want the space rented. But the creativity, the joy comes in the details. We are talking about the rights to expand, renewal options and cancellation options.
Think carefully about what party pays if anything goes wrong in the unit you lease or gain with a land contract. If you are dealing with a flex space, a combination of office and industrial areas, you definitely need a contract. For example, who is responsible for replacing the heating and cooling units?
In these hard times, landlords often push maintenance costs onto a tenant who may be intimidated to bring in a code enforcement officer from the city. The lease may say the property is acquired “as is” will be responsible for a myriad of costs unless negotiated up front.
Some office tenants want to go into a retail space so they can have signage. When reviewing the lease they miss the part where it states they are responsible for replacement of the whole signage unit, not just their own logo. That can be a big surprise for a small business trying to get off the ground and must replace a rusted out hulk and the mortar behind it before erecting a new sign.
Go into this landlord-tenant relationship with your eyes wide open. If the promises seem too good to be true, perhaps it is true. For a little bit of nostalgia, here is a clip from the first Broadway production of “Promises, Promises” in 1968: http://youtu.be/SJsLBVb3lmw